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Post-Amazon World: Say Goodbye to Public Auctions

Site consultants use TrustBelt to call for better economic development practices.

by RON STARNER

What's the real lesson of Amazon HQ2? It's how not to conduct a site selection process, says a panel of site consultants who expressed their dismay with the public spectacle.

"That was such a public process. I see a lot of pulling back from companies," says Ann Petersen, managing director of Cushman & Wakefield. "They are saying they do not want any public rumblings. They are being very selective about who they want to meet with. Confidentiality is even greater now."

The other site consultants who spoke on a panel at TrustBelt in Detroit recently agreed. "Tim Cook is the chairman of the board at Duke University. Apple had been very quietly negotiating with North Carolina about an opportunity there," said Derrick Mashore, senior vice president of CBRE. "That was 180 degrees away from what Amazon did."

Susan Arledge, president of site selection and incentives for ESRP Real Estate, said, "We all got sucked into Amazon's PR and marketing game. It was a brilliantly played marketing strategy. What have we learned? Communities learned better ways to market themselves, but the rest of us wasted our time."

Arledge added that the pervasive opinion among her clients now is simple: "They want to be where Amazon is not."

Petersen concurred, noting that "everybody thought they had a shot to win Amazon, but you have to hone in on your capabilities. My advice to communities is: don't waste your time on fruitless pursuits."

Ann Harts, executive vice president of site selection and incentives for ESRP Real Estate, said that Amazon may find it more challenging than it thinks to secure all the talent it needs in its chosen locations. "Cerner is already struggling to hire 6,000 people in the Kansas City area," she noted. "I thought Amazon could go to one of four cities across the country, but the labor market is very tight everywhere."

On other topics, the consultants dispensed advice to both companies and communities. If you represent a location trying to win a competitive project, the consultants said, you should focus on these things:

"Focus on your workforce pipeline," said Jeff Forsythe, founder of Forsythe & Associates Inc. "Look at your workforce needs down the road, not just today."

"Have an open line of communication between the governor's staff and your economic development staff," said Petersen. "Overcome hurdles for your prospects."

"Focus like a laser beam on your competitive advantage," said Mashore. "Every place has one. And then find a way to bridge that to talent. Talent is everything. HQ2 is going to be split between New York City and Greater Washington, D.C., and talent was the driver." (Editor's note: Mashore made this statement a week before Amazon officially announced its selection of Long Island City in New York and Crystal City in Northern Virginia.)

"Continue to fund incentives for the next few years," Arledge said. "Companies need to know that your support will be there."

"Continue to fund the commerce department in your state," said Harts. "You lose an advantage when your state is not strong and is not solidly behind the growth."

The consultants also expressed strong views on data and their impact on site decisions. "I remember one project where a community did not make the short list," said Arledge. "It ranked 15th out of 15 locations on the list, but I knew that it still merited consideration. I can bring forth the objective data, but you (the communities) can bring forth the subjective data and show the company what you are doing to fix any problems. You can't sell around a disadvantage."

Petersen agreed, noting that "once we have done our data drill-down, that is when our experience comes into play. We may know of a market just outside of the heat map. That is where our trusted relationship with the client comes into play."

Mashore summed up the thought for the panel by stating: "Never underestimate the power of human relations. Trust the data, but don't trust the data more than you trust your intuition."

Finally, the panel offered frank advice on familiarization tours. Speaking for everyone on the panel, Petersen cautioned, "Don't put us on a bus and drive us around all day. Driving us around to look at sites for six hours a day is just awful. There is no value in that. Provide an experience that is unique to your community."

“We all got sucked into Amazon’s PR and marketing game. It was a brilliantly played marketing strategy. What have we learned? Communities learned better ways to market themselves, but the rest of us wasted our time.”

— Susan Arledge, president of site selection and incentives for ESRP Real Estate

Forsythe added, "Make the best use of the time. We don't need to meet with your elected officials. These are business meetings when we come to town, so let's talk business."

Mashore advised locations to "be clear about your competitive advantage. What can you do that other areas cannot? Create a unique experience that showcases your unique value."

Arledge issued a call to action: "Make us do our job. If you need more information, tell us."

Harts closed by saying, "We treat you as trusted advisors. I like to meet you at events like this so that I can determine if you will be a trusted advisor."

Ron StarnerExecutive Vice President of Conway, Inc.

Ron Starner is Executive Vice President of Conway Inc. He has been with Conway for 16 years and serves as editor of the TrustBelt Report and lead organizer of the annual TrustBelt Conference. He also writes extensively for Site Selection and Conway's Custom Content Publishing Division. His Twitter handle is @RonStarner.